But while I detailed metrics for 16 core listed sector plays (& highlighted another 23 potential plays), I offered no recommendations. In fact, in terms of such nascent technology/innovation & the listed sector’s $2.6 billion market cap (just 2% of the $144 billion cryptocurrency market…which is another rounding error globally), I question if valuation’s even a relevant filter at this point. Same for management – many of which don’t necessarily match the typical CEO profile investors expect, or boast a prior/public track record.

[Not suggesting you abandon all (valuation) rationale. Or ignore management: Companies/projects will ultimately live or die by their management & they still need to be evaluated in their current role (at the very least). Focus particularly on what they actually do & achieve, not just what they say…]

In reality, the main challenge (& best framework) now for investors is to develop a real view on the entire sector – long, or short– one strong & personal enough to hopefully steer you towards the best investment opportunities, and help you sleep through the inevitable volatility & reversals to come. Thinking about cryptocurrencies & the blockchain separately is a great place to start, as people still confuse/conflate them*. Ultimately, they’re very different beasts…a negative view of one shouldn’t preclude a positive view of the other.

Over the last few months, I slowly added lines here & there to this post in my head. Well, the original: It soon evolved into a bear of a cryptocurrency & blockchainprimer. One which, anticipating an eventual audience, kept dragging me down an endless rabbit-hole of what about& what if questions…

It’s astonishing such a new innovation has attracted so much passion & opinion so fast. [In reality, its key components – cryptography, a distributed ledger (i.e. a peer-to-peer network), digital money – have existed for decades. The genius of Satoshi Nakamoto was applying them in such a radical & elegant new way]. We’re barely outta the gates here, but it seems like everybody’s already adopted a fervent position of advocacy, denial, or just plain old ignorance… Take your pick & damn the facts – close your eyes & you’d swear it’s politics, not technology.

But maybe this is no surprise – after all, we find it harder to talk (rationally) about money, even more than sex!? ‘Cos it’s personal. And emotional…nothing evokes those familiar demons, fear & greed, more easily than money. And that deeply personal relationship’s become even more fraught & anxiety-ridden – particularly in the West, with more to lose – as we live in a post-financial crisis world, with increasingly meagre economic growth prospects, relentlessly climbing public & private debt burdens, ever more polarised voters, and with even the future of work threatened by technology.

And then, Bitcoin: A new paradigm, uber-money, a stateless & entirely digital currency. Which only served to ratchet our fear & greed even higher. Too many struggle with the apparent irrational exuberance, and even more so the sheer intangibility, of cryptocurrencies. Which inevitably invokes a much deeper fear, of the same intangibility inherent in our fiat currencies, our fiscal obeisance to governments who seem dead-set on printing & spending their way into oblivion, the fragility of our financial assets & markets (which now exist only as electronic blips on hackable centralised repositories), and our economic future & security itself. Hence, that recent primal scream of denial:

[Yes, I counted – Howard Marks really did use five exclamation marks.]

But we also flog ourselves into a real frenzy of greed: How did we miss out so completely on Bitcoin’s incredible & stupendous gains over the last few years (even this year!)? We wonder if maybe, just maybe, this is still the beginning…could a cryptocurrency (or two) ultimately scale up to match the gold market, or even a major global currency? [So why didn’t the media swarm Murray Stahl, as they did Marks or Jamie Dimon? Here’s Stahl’s incredibly bullish take. Ironically, he helped inspire Marks’ next letter, a rather grudging & half-hearted mea culpa]. We even speculate whether investing in the blockchain is a chance to go back in time & actually get in on the ground floor of the internet itself?!